The impact of the Italian referendum and Brexit on the euro (Dayle Littlejohn)

GBPEUR exchange rates have reached a 3 month high at the close of play on Friday and in 4 weeks GBPEUR exchange rates have risen 10 cents making a €200,000 purchase £15,000 cheaper.

There are two main reasons why GBPEUR exchange rates have been on the rise and they are the Italian referendum and Brexit.

Italian Prime Minister Matteo Renzi is holding a referendum today as he wants to streamline parliament and take power away from the Senate. Presently there are 315 senate members and he wants to cut this to 100, which in turn would take power away from the Senate and give more power to the Government. This would mean the Prime Minister could speed the process of law making.

The Prime Minister has said if he loses the referendum he will resign which has paved a way for anti-establishment party Five Star Movement led by Beppe Grillo. The populist party could gain more power due to the PMs  demise and they have promised to hold a 2nd referendum in regards to keeping the euro, as many Italians are fed up that the economy is stagnant and they believe this

Polls are suggesting the PM will lose the referendum and in turn this could lead to further euro weakness and GBPEUR to break through into the 1.20s.

Friday Brexit secretary David Davis exclaimed that the UK could pay money to the EU which would keep the country within the single market once the UK leave the European Union (potentially in March). This indicates that there has been a shift in sentiment and the UK could opt for a soft Brexit instead of a hard Brexit and this is the reason why the pound rallied against the euro on Friday.

I expect major volatility with GBPEUR exchange rates throughout this weeks and in particular Mondays trading session. If the Italian PM loses the referendum I expect GBPEUR exchange rates to spike and for euro buyers this is worth taking advantage of.

It’s only a matter of time until UK Prime Minister is back in the press claiming a hard Brexit is just around the corner and therefore exchange rates could fall. As I have stated above it was only 4 weeks ago GBPEUR exchange rates were 10 cents less!

If you are buying or selling euros in the upcoming months and are looking to achieve competitive rates of exchange whilst receiving regular economic information feel free to email me the reason for the transfer (company invoice, property purchase) the timescales you are working to and I will respond with the options available to you along with the process of converting currency. My direct email address is [email protected] and I look forward to receiving your email.